U.S. borrowing rate for 1 year = 9.5%

U.S. deposit rate for 1 year = 8.7%

French borrowing rate for 1 year = 11.3%

French deposit rate for 1 year = 10.2%

French franc spot quote = $0.176378

French franc 1year forward quote = $0.172947

10.38 Suppose Alcoa in 1995 had a payable of FF 1 million due in one year. Alcoa's cost of the payable using a money market hedge is _______ and its cost using a forward market hedge is _______.

a) $173,900; $177,470

b) $174,925; $176,300

c) $176,671; $172,900

d) $178,937; $174,700